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Retained earnings represent: Group of answer choices the shareholders’ claim on total assets. the amount of cash held by the business. the total of revenue for the period. the amount of profit held in the company for future use.

Question

Retained earnings represent: Group of answer choices

the shareholders’ claim on total assets.

the amount of cash held by the business.

the total of revenue for the period.

the amount of profit held in the company for future use.

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Solution

Retained earnings represent:

  1. Not the shareholders’ claim on total assets. Shareholders' equity represents the shareholders' claim on total assets, not retained earnings specifically.

  2. Not the amount of cash held by the business. Cash is a separate account and is not directly related to retained earnings.

  3. Not the total of revenue for the period. Revenue is the income generated from normal business operations and includes discounts and deductions for returned merchandise. It is the top line or gross income figure from which costs are subtracted to determine net income.

  4. The amount of profit held in the company for future use. This is correct. Retained earnings are the portion of a company's profit that is held or retained and saved for future use. Retained earnings could be used for funding an expansion or paying dividends to shareholders at a later date.

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Similar Questions

The retained earnings of a company represent:a.The amount of cash held by the companyb.The amount of profits reinvested in the businessc.The value of the company's assetsd.The total liabilities of the company

Retained earnings are a component of:

What are retained earnings?Multiple choice question.what the business owes to othersaccumulated earnings distributed to stockholdersaccumulated earnings not paid out to stockholderslong-term assets with no real physical form

Retained earnings are a category of what?Multiple choice question.Corporate profitsInterestRentProprietors' income

Retained earnings reflect:Question 4Answera.The total debt owed by the companyb.The market value of the company's common stockc.The initial investment made by ownersd.Profits earned by the company over time

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